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3 Alternatives to Traditional Long Term Care - YouTube
Channel: Oak Harvest Financial Group
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my grandparents spent over a million
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dollars on medical expenses and
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long-term care in their retirement this
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video is going to show you three
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innovative ways to have guaranteed
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long-term care protection any of these I
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wish they would have used hi I'm Troy
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sharp CEO of Oak harvest Financial Group
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certified financial planner professional
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host of the retirement income show and
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author of the upcoming book core for
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long-term care is one of those things
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that is critical to a successful
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retirement income plan an investment
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plan but not a lot of people address it
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until it's too late
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I created oak Arvest Financial Group my
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wife and I to be affirmed as my
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grandparents could have walked into and
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felt comfortable and known they were
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sitting across the table from somebody
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who was looking out for their best
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interest somebody who firmed that did
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more than just stocks or bonds a firm
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that did integrated retirement planning
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and investment management so this
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message was reinforced to me again about
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five or six years ago when a gentleman
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called in from the retirement income
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show then I've hosted for the past nine
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years and he said Troy I'm 87 years old
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I don't think you can help me but I'm
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gonna come see you anyways so they
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booked an appointment and he came in to
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see me and the first thing he did was he
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slid his long term care policy statement
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over to me and I looked at it and it
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said dear sir we're writing to inform
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you that your long-term care premiums
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are going up 100% this year you said
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Troy that's not the kicker he said this
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is the third year in a row I've received
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that notice he said if I get sick
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they're gonna give me
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$36,000 3,000 a month to keep this
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policy in force I have to pay them a
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check for $30,000 he says what do I do
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can I is there anything you can help me
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with is there anything I can do
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I said well no sir I said the cost of
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long-term care at age 87 that's about
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what it costs he had paid for this
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traditional long-term care insurance
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policy for the past 15 or 20 years and
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now when he's getting up in age its cost
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prohibitive to keep so this is why
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long-term care planning is very
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important and we have to be considering
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guaranteed innovative alternative
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strategies to finance long term care if
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it's something that's important to you
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so a few stats about long-term care
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first this may sound counterintuitive
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but the healthier you are the
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likely you are to need long-term care
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coverage we're living much longer lifes
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the average male is expected to make it
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to about 85 today the average female
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about age 88 but with increasing medical
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advancements technology our life
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expectancies continue to extend so we're
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seeing that people who are the
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healthiest are the ones that are most
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likely to need long-term care I didn't
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realize this until I went through it
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with my grandparents but the real
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purpose of long-term care planning is to
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make sure that the surviving spouse has
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enough money left over to make sure that
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he or she is okay because my grandmother
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when my grandfather got sick he had two
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aortic aneurysms they had to perform an
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emergency surgery I was nine hours he
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suffered hypoxia during the surgery his
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he was in a coma for five weeks his arms
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atrophied his legs atrophied his throat
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muscles atrophied we had to do a nursing
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home for six months at $10,000 a month
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we had to do home health care for
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$40,000 a month for six months on top of
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that all the medical bills and ansel are
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ancillary costs that go along with it so
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it was a nightmare grandma she was going
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to spend whatever it took to maintain
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hope that he was going to get better
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that he was gonna recover and they'd
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have some semblance of a normal
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retirement so she spent and spent and
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spent holding on to hope that he'd be
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okay and she did that without any regard
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to how much money would be left for her
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so any type of long-term care planning
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wasn't necessarily for for grandpa it
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was to offset the financial cost the
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burden of the financial responsibility
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of paying for long-term care so she
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would have enough money so more of the
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assets could be preserved and she could
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have enough that lasted the rest of her
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life the problem with traditional
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long-term care insurance is one if you
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don't use it you lose it
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so you pay for you pay an expense every
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single month $100 $200 a month whatever
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it is per spouse and if you don't use it
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you you lose the coverage and in most
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instances now the second thing is that
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long-term care costs or excuse me
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long-term care premiums with traditional
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policies increase as you age so what
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happens is when you buy your long-term
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care policy you go into a pool of people
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who bought your policy around that same
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time so as that pool of people ages
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and experience more claims those costs
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get passed through to you so if you're
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one of the healthy ones in your group in
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your pool and other people are needing
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long-term care coverage those costs get
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passed through to you in the form of
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higher premiums now the insurance
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company can't just raise premiums
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willy-nilly on you they actually have to
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apply to this state that you live in and
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the state would come in look at the
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books and say okay you applied for a
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hundred percent increase but you can
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only increase rates forty-eight percent
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this year and then you get that notice
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in the mail that your long-term care
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premium rates are going up we're to go
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through three different ways of how to
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have permanent fully guaranteed
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long-term care coverage where you won't
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have to continue to put money out of
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pocket at worry about increases going up
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and you if you don't use it you won't
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lose it so the first way is what we call
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asset base long-term care now when my
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grandparents were alive and they got
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sick there was only one maybe two
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companies out there that did this now we
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have dozens and dozens of companies that
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offer competing products so the
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marketplace has become a lot more
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competitive which is good for you the
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consumer because it means you have more
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choices to choose from so the basic
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concept is you make a singular deposit
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some companies this can be IRA money
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other companies it has to be non IRA
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money it needs to be customized to your
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particular situation but let's say you
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make $100,000 deposit first rule of
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asset based long-term care is when you
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need long-term care coverage that amount
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that one hundred thousand balloons into
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a much larger amount it could be two
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hundred and fifty thousand it could be
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six hundred thousand it depends on your
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age and gender some policies may give
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you two hundred and fifty thousand
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dollars of coverage for that one hundred
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thousand dollar deposit
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others may give you five six seven
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hundred thousand it just depends on what
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the policy is specifically designed to
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do and your age and gender so that's
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what we call asset based long-term care
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and there's fifteen twenty of these on
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the marketplace they all have their
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little nuances and their little twists
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so it's important that you have
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something customized for your particular
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situation now with that asset base
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long-term care if you don't use the
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long-term care coverage the 250 or the
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400 or whatever that benefit balance is
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some of the policies you just get your
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hundred thousand dollars back but other
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policies you'll get two hundred and
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fifty or four hundred or five hundred
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thousand dollars as
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the overall death benefit so if you
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don't use it you don't lose it and then
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finally those costs are guaranteed to
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never increase once you make your
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deposit the benefits are fully
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guaranteed it's completely paid you will
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never have to put more money in and if
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you need long-term care you'll have it
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in the future so the second way to do it
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is to use permanent cash value life
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insurance so you have two choices when
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it comes to permanent cash value life
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insurance you have whole life and you
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have universal life so for many years
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and still a lot of people today that
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when they think of life insurance they
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think well I have to die to get the
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benefit well that's not the case anymore
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with these types of policies you do not
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have to die to get the benefit of your
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life insurance if you need long-term
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care if you need home health care if you
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have the right type of permanent cash
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value life insurance policy you can
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access that death benefit during your
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life to help offset the financial costs
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and burden of a long term care or home
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health care stay so something really key
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to understand when it comes to these
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policies the whole life or the universal
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life or the asset based care is
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long-term care benefits payout in one of
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two ways
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it's either what we call a reimbursed
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reimbursement style plan or an indemnity
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plan so reimbursement plans mean you pay
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out-of-pocket first and they're going to
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reimburse you for medically approved
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expenses so there's usually going to be
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a set parameter within the policy that
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says this is what we'll reimburse you
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for usually you have to go to a state
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licensed facility you have to receive
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care from a licensed skilled
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practitioner and then they'll reimburse
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you for those expenses the one I like
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the one I prefer is what we call an
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indemnity style plan and this is what I
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wish my grandparents would have had
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because I took two years two and a half
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years of my life off basically to take
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care of my grandparents and I didn't
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have I wasn't able to work because I had
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to take care of my grandparents so I got
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into a little bit of a credit card debt
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all my savings have been depleted but if
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they would have had an indemnity style
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plan you don't have to be a licensed
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skilled care provider to be reimbursed
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for the long term care expenses so
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grandma could have used that policy and
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she could have given me you know three
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or four hundred dollars a week so I
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would have something to to to pay my
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bills reimbursement or indemnity
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indemnity once you
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qualify then the insurance company will
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send you a check for whatever the policy
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limits are you usually have some
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flexibility there you can take up to the
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maximum or you can take any any amount
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less with whole life and universal life
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or asset based care you want to make
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sure that you have either understand if
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it's reimbursement or if it's indemnity
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based so universal life is almost a
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combination of term insurance and
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permanent insurance the cost structure
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is less than that of whole life but it
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has more flexibility to it whole life is
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a pretty rigid product and it pays
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dividends universal life is a much more
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flexible product the cost structure is a
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bit less and you have a little bit of a
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different way that you can structure it
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so either one either the whole life or
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the universal life they have a death
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benefit they have a cash value the money
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you put in is is growing is accumulating
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interest you can access it if you if you
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need to for retirement income if you
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pass away the much larger death benefit
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on both of these goes to your family but
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for long-term care and home health care
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if you need that death benefit you can
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access it during your life to help pay
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for expenses and you want to make sure
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that I prefer the indemnity style as
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opposed to the reimbursement style now
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the third way so the first way asset
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based long-term care the second way
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permanent cash value life insurance
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whole life for universal and the third
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way is a fixed indexed annuity with what
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we call a home health care doubler
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attached to the policy so with a fixed
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indexed annuity it's simply a contract
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issued from a life insurance company
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that protects your principal 100% some
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of these riders are included at no cost
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and other riders you have to pay
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somewhere between 0.9 to 1% per year for
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but this is what it'll do for you it'll
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give you a guaranteed growth rate for a
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benefit account so most people they use
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this benefit account for a guaranteed
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lifetime income so let's say you put
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$300,000 in your money safe and it's
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growing if it's a fixed indexed annuity
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it's indexed to the market the best ones
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are going to give you four or five six
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percent average rates of return as a
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target now what the insurance companies
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will do is they'll attach a rider to the
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policy sometimes at a cost sometimes
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there's no annual cost every company is
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different but this will give you a
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guaranteed growth rate
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maybe 4% maybe 7% everything every
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company is different but let's say
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you're 300,000 ten years later the
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guaranteed income side is now worth six
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hundred thousand and you start receiving
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a guaranteed lifetime income of $30,000
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a year that's a lifetime income it'll
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never run out but if you need long-term
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care and some of these policies will pay
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for only in a facility and some at home
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but if you need long-term care that
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$30,000 guaranteed lifetime income it'll
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double to $60,000 to help pay for your
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long-term care or home health care
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expenses most companies will double the
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income benefit for a maximum of five
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years the long-term care benefit for
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five years and then if you still need
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care or if you pass away it reverts back
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to the normal guaranteed lifetime income
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amount and your spouse will receive that
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forever so that's a way that that you
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can use your money to not only provide
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you a guaranteed lifetime income but
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also have some supplemental long-term
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care protection protection there through
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that doubler threeways asset based
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long-term care permanent cash value life
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insurance and then considering a fixed
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annuity or fixed indexed annuity with
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the home healthcare doubler attached to
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it to give you guaranteed lifetime
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income and also long-term care expenses
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so if you enjoyed today's video I
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encourage you to share it with a friend
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share it with a family member
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long-term care is one of the reasons
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that I believe millions of people could
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potentially run out of money even people
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who think they're they're completely
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fine and they have a million dollars two
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million dollars saved long-term care
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expenses are going up in this country
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and we're living much longer lives so we
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need to make sure that not only we're
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taking care of but our spouse and our
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family is taken care of as well so
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permanent coverage addressing this
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long-term care need definitely a
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valuable tool inside a retirement income
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plan so make sure to share this also hit
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the subscribe button down below the
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little bell icon to be notified when we
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upload additional videos as it pertains
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to retirement income tax planning or
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investment planning this is all about
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your retirement and trying to help you
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have the best retirement that you can
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from a financial standpoint
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you
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